When you file for bankruptcy, it’s usually an attempt to get rid of your debts. There are some cases where you may want to keep a debt and the asset associated with it though, and that is when you’ll want to ask a Montgomery County Chapter 7 bankruptcy lawyer about something known as a “reaffirmation agreement.”
What Does a Reaffirmation Agreement Do?
When you ask for a reaffirmation agreement, you are saying that you do not want a particular debt wiped away. You want to keep paying the debt. This is typically used in a Chapter 7 bankruptcy, where assets have to be liquidated to pay off a debt.
With a reaffirmation agreement in place, you do not have to give up a particular asset as long as you keep paying the debt associated with it. So you can wipe away your other debts, but keep a car loan or a mortgage. Then, as long as you keep paying on time, you can keep your vehicle or your home.
You just have to be absolutely sure that this is a debt that you can afford to pay though. If you go through bankruptcy, reaffirm this debt, and then realize that this debt was one of your biggest financial issues, you are essentially out of luck. It is unlikely that you will be able to address this debt in another bankruptcy filing anytime soon, so you’re stuck with the financial stress even after filing for bankruptcy and taking a big hit to your credit score.
When Can I Request a Reaffirmation Agreement?
If you want to request a reaffirmation agreement, you should do it soon after you file for bankruptcy. You will not be able to ask about reaffirming a debt once your case has been discharged, so you must have this agreement signed and in place before your case proceeds too far. Your lawyer can help you draw up an agreement and contact the right creditor.
Can a Creditor Make Me Sign a Reaffirmation Agreement?
Also note that a reaffirmation agreement is a completely voluntary agreement. The debtor must ask for one. A creditor cannot come to you during the bankruptcy process and make you sign such an agreement so that you are forced to keep paying their debt.
Do I Need a Lawyer to File for Bankruptcy?
Filing for bankruptcy on your own can be tough, especially if matters get more complicated by reaffirmed debts and other factors. A bankruptcy attorney from our firm can guide you through the process, help with the paperwork, and ensure that no mistakes are made.
Talk to Our Legal Team
If you are considering bankruptcy, it’s good to know about the pros and cons of the process before you file. Contact Mudrick & Zucker to schedule a consultation with our team and we could tell you if you’re a good candidate for Chapter 7 or Chapter 13 bankruptcy.
